FanDuel has been and will continue to be one of the most important brands in the global sports betting industry while sitting among the best sports betting apps and best sportsbooks. So when its CEO sits down and talks about the state of the industry, it is worth a listen.
Last Thursday, FanDuel CEO Amy Howe sat down with correspondent Contessa Brewer at the CNBC Evolve Global Summit and discussed a wide range of topics. It included the state of her own company and the onslaught of high-end competition FanDuel is facing in the competitive U.S. market.
It's been over five years since the U.S. Supreme Court decision to overturn its blanket ban on sports betting in America. Since that time 35 states plus Washington, D.C. have launched legal sports betting platforms, and according to the American Gaming Association, over $220 billion has been legally wagered across the country.
FanDuel has been in a years-long battle to be the most popular U.S. sports betting app with DraftKings. Until recently the company has held the lead over its foe, although the gap has been closing lately.
Together, FanDuel and DraftKings hold a combined 70%-plus market share in America with a throng of other providers left to battle for the other 30%. Of interest, it was just last week during DraftKings' third-quarter earnings call that Eilers and Krejcik reported the company surpassed FanDuel's 30% share of the American market, finishing at 31%.
Added into the sports betting mix will be ESPN BET, which is expected to make a huge splash later this month and Fanatics, which is in the process of taking over PointsBet's U.S. locations. One, or both could cut into the market share that FanDuel has spent a year building.
Amy Howe acknowledged “well capitalized, very strong competitors on the field” during the interview, but she also differentiated the FanDuel experience from the others.
“What we know is you’ve got to have a superior product experience, right? At the end of the day, if your product doesn’t work, it doesn’t matter how great your brand is, you got to have a really phenomenal experience,” said Howe. “But at the same time, one of the things that we’re seeing, which is not dissimilar to many ecommerce industries, is that you’ve got to have scale.”
"At the end of the day, competition is a great thing for consumers,” She continued. “So I think you're going to continue to see even more innovation on the product front, both in terms of the assortment — live betting is really taking off — but also the user experience. I think we're all trying to figure out what is it beyond product and great promotional vehicles that will ultimately drive even more loyalty to the platform.”
On the risks
Becoming a part of the U.S. legal sports betting industry is both costly, and risky. FanDuel CEO Amy Howe mentioned the significant hurdles a sportsbook needs to clear just to join the U.S. scene, while at the same time subtly warning those in line to challenge the sports betting provider.
“You can't just pick up and decide you want to be an online sports bettor,” Howe said. “You have to be licensed, you have to navigate a very complex regulatory environment. There are significant costs to spend in creating a great product and technology platform.
"And oh, by the way, you're spending a lot of money making sure that, again, you can responsibly bring consumers to your platform. So it's certainly not for the faint of heart. And if you're sitting there with a low single-digit share, and you don't have that scale advantage over time, it just becomes harder to reinvest back into giving what consumers want.”
FanDuel has been able to forge relationships with the most important sporting entities on the planet, and most other betting sites haven't been able to do on the same scale.
The company currently holds a presence in all 50 U.S. States and is an official sports betting Partner with the NFL, NBA, MLB, and the NHL as well as other important leagues and teams. FanDuel boats crucial relationships with key broadcasting companies across the nation and even holds the rights to such American institutions as NFL Sunday Ticket.
"...we partner with the biggest leagues in the world, right, NFL, NBA, the PGA Tour has been a phenomenal partner, WNBA," Howe said. "And what that allows us to do is it allows us to really elevate our marketing capabilities, right? When you’re watching, you know, NBA on TNT, you see Charles Barkley who’s talking about same-game parlays and Kenny Smith, it’s been a huge part of, you know, bringing the right users onto the platform, but also really driving the right level of engagement. And so it’s been critical to our success."
On potential profitability
Howe touted FanDuel's standing as one of the top sports betting providers in the nation. Parent company Flutter Entertainment was profitable for the first half of 2023 with the addition of global entities. The U.S. market leads Flutter's charge toward profitability.
"...this year will be a very important inflection point for FanDuel, but I would argue for the industry. We should be the first U.S. operator – online operator to be profitable on an EBITDA basis for the full year right," said Howe.
So, all eyes will be on the battle for sportsbook supremacy in the U.S. legal sports betting industry. FanDuel and DraftKings look as though the close competition will continue, and the emergence of ESPN BET and Fanatics will have an effect on the American industry.
It's an interesting time for the U.S. legal sports betting industry. By this time in 2024, we may be talking about a three- or four-way race to be the top American online sportsbook. FanDuel seems to like where it is in terms of the company's U.S. business model, and it seems like business as usual going forward.